Application for Extension of time for passing arbitral award under Section 29A of Arbitration Act maintainable even after 18 – month deadline for making of award

Introduction

In reference to a civil appeal against the judgment passed by the Calcutta High Court where it was held by the court that the application for extension of time under Sections 29A(4) and 29A(5) of the Arbitration Act can only be considered if they are filed before the expiration of the mandate of the tribunal, a 2 – judge bench of the Hon’ble Supreme Court consisting of Justices Sanjiv Khanna and R. Mahadevan noted that such application for extension of the time period for passing an arbitral award shall be maintainable even after the 12 – month period has expired along with the 6 – month extension period. Additionally, while adjudicating the matters pertaining to expiration of time period, the court also noted that the jurisprudence for adjudication shall be guided by the ‘principles of sufficient cause’.

Analysis of the Judgment

After considering the legal issues which arose in the present case which pertained to filing of application for extension of time, the court examined Section 29A of the Arbitration Act and noted that the cases wherein an award is not made within a period of twelve or eighteen months, the mandate of the tribunal shall lapse. However, such provision shall not apply if the courts have already extended the period either before or after the expiry of the extended term. Additionally, after interpreting the Sections 29A(4) and 29A(5), the court noted that there is no bar to the arbitration proceedings to continue during the pendency of the extension application. Moreover, further time shall only be granted by the court once the parties have shown sufficient cause along with payment of requisite costs imposed upon them.

The Hon’ble Supreme Court, while laying down the present judgment also upheld the reasoning of the High Court in the same matter which stated that upon the termination of the mandate, the arbitral tribunal becomes de jure incapable of performing its function and restrictive interpretation of Section 29A would merely lead to impediments and complexities which would lead to parties rushing towards the courts even before the expiry of statutory mandate. Therefore, in cases where the award is pronounced during the pendency of an application for extension of period of arbitral tribunal, the Court would need to decide the application under sub – section (5) and even in cases where the award has been passed, invoke sub – sections (6) to (8) of the act along with the first and third proviso to Section 29A(4) of the 1996 Act.

Conclusion

The present judgment has laid down clear jurisprudence regarding the deadline and maintainability of making an application for extension of time for passing an arbitral award under Section 29A of the Act and laid down that “an interpretation which produces an unreasonable result is not to be imputed to a statute if there is some other equally possible construction which is acceptable, practical and pragmatic.”

The judgment has also ensured that arbitration proceedings do not abruptly get terminated due to rigid procedural time limits and effective and efficient arbitral procedures are not hampered.